Two Ways Women Often Get Hurt in a Divorce

MANISHA THAKOR: The biggest financial mistake I see divorcing women make is holding on to illiquid assets. (Men make plenty of mistakes too; I’m going to speak to us ladies in my answer since my wealth-management practice is focused on empowering women).

These illiquid assets tend to bubble up in one of two situations. The first is around the family home. Very, very often I see women want to keep the home–either so as not to disrupt the lives of children or for sentimental reasons. Alas, homes can be money pits at times. Without adequate thought being put into how much annual ongoing maintenance (mortgage payments, property tax, insurance, upkeeps, etc.) will run, it’s very easy to underestimate how difficult a burden the house will be to run on a post-divorce income.

The second area I see illiquid assets bubble up is around the area of splitting investments. In households where there has been enough wealth that venture capital, hedge funds and private equity has been part of the household portfolio, I have seen women get tripped up. With these asset classes it is particularly important to make sure you have a solid understanding of both valuation and liquidity. If you receive a chunk of assets in a settlement that are locked up for a months–or years–you may find yourself in a very different financial situation than the “raw numbers” indicate. As such, particularly in high-net worth households, it’s important to put your settlement under a financial planning microscope–bring in your wealth manager or CPA to discuss.

P.S. Don’t forget to change your beneficiaries on investment accounts and to update your estate-planning documents post-divorce as well. That’s another common mistake for both genders!